Gevo Inc (NASDAQ:GEVO). has announced that its wholly-owned dairy manure-based renewable natural gas (RNG) project in northwest Iowa will sell renewable natural gas to BP.
The company said Gevo NW Iowa RNG LLC has signed binding, definitive agreements with BP Canada Energy Marketing Corp. and BP Products North America Inc. for the sale of RNG’s production.
The NW Iowa RNG project is currently being constructed and is expected to commence production in early 2022. Upon project completion, NW Iowa RNG is estimated to produce about 355,000 MMBtu (metric million British thermal units) of RNG per year.
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Gevo said the RNG is expected to be sold into the California market under dispensing agreements that BP has in place with Clean Energy Fuels Corp (NASDAQ:CLNE)., the largest fueling infrastructure in the US for RNG.
RNG-fueled vehicles are estimated to result in up to 95% lower emissions than those fueled by gasoline or diesel on a lifecycle basis, according to a US Department of Energy study.
Gevo said it is anticipated that NW Iowa RNG will benefit from environmental product revenues under California’s Low Carbon Fuel Standard program and the US Environmental Protection Agency’s Renewable Identification Number program.
Beginning in late 2022 upon stabilized operations and pathway certifications of its environmental products, the company said NW Iowa RNG is anticipated to generate cash distributions to Gevo of about $9 million to $16 million per year.
Starting in 2024, Gevo will have the right to use a portion of NW Iowa RNG’s production as process energy at its Net-Zero 1 Project or other production facilities, including future Net-Zero projects.
“RNG is proving to be a key fuel in the energy transition. BP has a value chain that allows RNG to reach the transportation market, and it’s a pleasure to work with a company that shares our vision of a low-carbon future,” said Gevo CEO Patrick Gruber in a statement. “This is an excellent opportunity to meet the growing demand for RNG and to expand our RNG business. We are glad to be working with BP.”
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